American Express Publishing Corp. is testing up to a dozen book properties based on its flagship magazines, eyeing a potential golf title acquisition and pumping up its custom publishing operation.

The expansion plans come as AmEx marks the fourth anniversary of the joint venture that turned over management of its magazines to Time Inc. And while the venture still has its critics, it is now on solid financial ground.

INITIAL RETURNS WERE LOW

The publishing unit does not break out its financial results separately. But executives with knowledge of the numbers estimate that in 1994-the unit's first full year under Time Inc. management-it had revenues of about $110 million and operating profits of about $1.5 million, rather paltry by industry standards.

Last year, the unit's estimated revenue figure jumped to just more than $130 million and profits soared to between $10 million and $15 million.

Under terms of the unusual deal completed in March 1993, Time Inc. is paid a management fee-believed to be $2 million a year-to manage properties that are still technically wholly owned subsidiaries of AmEx. Profits above a base line are shared equally by the partners.

"When the partnership was put together, only three of the [publishing group's] units were profitable," said American Express Publishing President Daniel Brewster. "All eight units were profitable in 1996."

USING AMEX'S DATABASE

The current expansion plans take advantage of the publishing unit's ties to the parent company's database of card holders.

One area the company wants to explore more is the hot but crowded golfing arena. Currently, AmEx publishes American Express Golf, an annual that solicits ads from auto marketers, financial service companies and hotels. The magazine, with a controlled circulation of 150,000, could increase frequency to quarterly next year.

"We're certainly looking at expanding in the category either through acquisitions or start-ups," Mr. Brewster said.

The new activity marks a dramatic turnaround from four years ago, when Food & Wine was losing money and Travel & Leisure was under attack from rival Conde Nast Traveler.

But Meigher Communications Chairman-CEO S. Christopher Meigher III, a former Time Inc. executive and now a publisher of rival food title Saveur, said the AmEx magazines still rely too heavily on their corporate parent for success.

`A FUNNY ASSET'

"The real question is where does [AmEx Publishing] go from here. It's still a funny asset," he said. "If you didn't have the ability to bill and renew [subscriptions] on the card, Food & Wine would probably be losing $4 million to $5 million a year. Even with it, it's probably only breakeven."

"That's absolutely untrue," Mr. Brewster said, insisting the magazine had a modest profit last year and is the cornerstone to spin off books such as "Pasta Quick From Scratch," published this year.

Lisa Henriques, publisher of Conde Nast Traveler, also took a swipe at the AmEx connection.

AmEx also plans a more aggressive custom publishing operation. Ann Marks, VP-marketing for Travel & Leisure, added the title of general manager of the unit late last year.

BIG EXPECTATIONS

"We expect custom publishing to be big, with revenue eventually reaching $10 million or more per year," she said.

The group's biggest projects to date: Business News, sent to 1.5 million Office Depot customers three times a year; and Fresh Thoughts, mailed to 3.5 million 1-800-FLOWERS customers last year.

Talks are under way about expanding existing newsletter projects with Kraft Foods and Johnson & Johnson into full-blown custom magazines.

Meanwhile, Mr. Brewster said Departures, an affluent lifestyle magazine sent to 331,000 AmEx Platinum cardholders, has been a "runaway success." Last year, ad pages jumped 21% to 559, the third consecutive year of double-digit increases.